Italy’s economy has begun to recover from its worst post-war recession, following the global crisis, but the early signs are that growth may remain weak, as it has been for some years. This relatively poor past performance, with dismal productivity growth, underlines the importance of structural reforms that lead to more robust growth, as identified in past Economic Surveys. Another pressing challenge is to continue to improve fiscal sustainability. Although the budget deficit widened less than in many other countries, as a result of the government’s responsible fiscal policies, due to the impact of the crisis the public debt-to- GDP ratio is nonetheless rising once again from one of the highest levels in the OECD, against a positive background of relatively low private debt. With bond markets having become more sensitive to sovereign risk, action to bring the budget toward balance remains crucial. Stronger growth would of course also help the debt-to-GDP ratio to decline and public finances to improve. Thus, policies to sustain economic growth and secure fiscal sustainability together would increase the chance of success.